GM’s quarterly profit surges undeterred by recall costs

The largest US automaker has revealed that its fourth-quarter earnings soared, exceeding by a margin analyst’ expectations, buoyed by strong demand for the group’s high-yield SUVs and trucks in North America.

The home region was mainly responsible for the profit surge, even though it also incurred record recall costs, with Chief Financial Officer Chuck Stevens reporting the company forecasts positive profitability in all geographic markets this year. Additionally, GM was “very much on the path to 10 percent margins (in North America) in 2016.” Last year’s profit margins in the core region were 6.5 percent – and if you took away the additional costs stemming from the record number of recall campaigns, they would have reached 8.9 percent. The US automaker also revealed it was mulling a dividend raise of 20 percent, in a move called by most of its shareholders. Without special items, the carmaker gained $1.19 per share in the quarter, far above average analyst’ estimates that set the return at just 83 cents.

Net income grew to $1.1 billion, or 66 cents a share, from $900 million, or 57 cents a share, during the same period a year ago. Save for the recall costs 2014 operating profit would have added another $2.8 billion to the $6.5 billion figure, with net income per share of $1.65 climbing by another $1.07, according to GM. Stevens credited North America for most of its quarterly profits, buoyed by rising sales of full-sized SUVs and pickup trucks – profit on these vehicles usually outshines by a mile the one coming from smaller passenger cars. GM also disclosed the annual bonuses owed to its US-based United Auto Workers union employees, rising from 7,500 a year ago to up to $9,000 each.